Has Public Ownership Of Newspapers Been Such A Disaster?

As I've stated before, one of my big pet peeves is the idea that the media (newspapers in particular) should somehow exist in this extra-market state. A lot of old-school journalist types think that the newsmedia should be solely focused on reporting the truth and holding government and large corporations accountable, and that it shouldn't have to worry about pesky things like the profit motive.

The Murdoch-Dow Jones face-off is only the most dramatic
illustration of what has been obvious for a long time, which is that
public ownership and newspapers do not mix. Investor interests can be
balanced against the interests of journalism, and compromises in either
direction can be rationalized, but at bottom it is an irreconcilable
conflict in which journalism will always lose.

Public ownership has been a disaster for newspapers not just because
it invites hostile takeovers. Quite simply, much of what newspapers do
has no clear investment rationale. Entire segments of the business --
such as foreign bureaus and investigative reporting -- are inimical to
profitability, particularly when viewed on the quarter-by-quarter basis
favored by Wall Street. Cramer nailed down the shareholder value view
of the newspaper biz a few weeks ago, when he said, "These are
diminishing assets. They don't need to exist. Younger people rarely
read them."

Allow me to make a somewhat disjointed rebuttal. The first point I'll make is that newspapers didn't seem to have any problems with public ownership back in the 90s when their stocks were flying high and profits were marching steadily higher. Back then, shareholders, editors and publishers all got a long -- everyone was happy. It was only when the industry started its decline that the profit motive came to be seen as a force contra good journalism. Convenient timing. Given that nothing has changed in terms of ownership structure at most newspapers, it would seem that these companies' failure to adapt to changing times, more than public ownership, is at the heart of their predicament. Ultimately, then, what Weiss is suggesting here is that newspapers be allowed slouch unmolested into oblivion. Let the New York Times pay as much as it wants to maintain its Chechnya, Beirut and Bogota bureaus, let it have its own golf analysts on staff, if it wants. If only there weren't pesky shareholders to please, it could bleed its money away in peace.

The funny thing is that the piece actually proves the exact opposite point that it's trying to make. If you think that newspapers engage in profligate spending now, just imagine how bad they would be if they were all held by non-profit trusts, as Weiss would like to see happen. It'd be ten times worse, and what's more, there'd be absolutely no pressure on them to adapt their business models to changing times.

Now, I suspect that this message resonates with a lot of Salon's progressive-leaning readership, but at its core, Weiss is making a very anti-progressive arguments, which is that the heyday of news was when these organizations were tightly controlled by a few elite families:

...Newspapers were operated by public-spirited families like the
Bodenweins and the Sulzbergers and the Bancroft clan that owns most Dow
Jones shares. The latter, unlike the Sulzbergers, had no role in the
operation of the paper -- a hands-off attitude that Dow Jonesers will,
I am sure, miss greatly once they enter the Murdoch era. With a few
isolated exceptions, the families have long since sold out and their
successors have surrendered to the number crunchers, because numbers
are all that matter to a public company.

To people interested in "social justice" and egalitarianism, the idea of "public-spirited" families graciously sharing the news with the masses should be disturbing; it's also deeply antithetical to anyone interested in new media (like, but not exclusively, blogs).

Ultimately, the real problem with newspapers is that people are reading them less, as alternative options for news proliferate. It's hard to see how returning power to the Sulzbergers and the Bodenweins would solve this problem. If anything, it would make it much worse, since they wouldn't have shareholders clamoring for change.

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The Stalwart is a blog written by Joseph Weisenthal, covering such topics as stocks, business, economics, politics, technology, gambling, chess, poker, economics, current events, music, math, Chinese food, science, randomness, kurtosis, sports, evolutionary fitness, and anything else of the author's choosing. The words contained herein are the author's own, not affiliated with any other firm or employer.